Monday, November 30th, was the 46th Trade Day in Korea. The Trade Day event was held as a celebration for reaching 9th place in total exports in the world for the first time. For this remarkable celebration, Lee Myung-bak, president of South Korea; Choi Kyung-hwan, Minister of Knowledge Economy; and more than 1,000 representatives and workers of trade enterprises and the government participated. It is noticeable to see a country to be included among the world's top ten, even at a time when global economic crisis has significantly deteriorated exports.
At the event, Sakong Il, the president of Korea International Trade Association (KITA), said, "While the world economy is going through the worst hardship after the Great Depression in the 1930s, despite the low trade volume worldwide, Korean trade is comparably thriving. The main reasons for our success are hard work, decisive reconstruction, efforts to discover new markets, and most importantly, workers and entrepreneurs in our history who ardently participated in trading."
As miraculous as the increasing rate of trade may seem, looking behind, there was no miracle involved. After Colonial Japan, South Korea was left devastated as one of the poorest countries in the world. After his election in 1961, President Park Chung-hee sought to improve living standards through the modernization of South Korea's young economy. South Korea received aid from foreign countries to invest in infrastructure which ranged from education to modern communication networks. The improvement in education led to an improved work force that could handle larger capacities of work. The government, in an effort to gain an advantage in the international market, encouraged the production of labor-intensive exports. Trade thrived, and in November 30, 1964, South Korea celebrated its total export of 100 million US dollars.
South Korea's real gross domestic product rose rapidly from US$30.3 billion in 1960 to US$340.7 billion in 1989. To keep its competitiveness in the global trade market, the government applied a series of policies to encourage export. The government made incentives for exports ranging from reduction of taxes for exporters to accelerated depreciation allowances. By the 1970s, South Korea's exports had increased by approximately 45 percent a year.
Continuing from the past, South Korean trade has not only thrived but also survived through turbulence. Korea proved to the world its trade system could survive through hardships. The Asian financial crisis shrank the South Korean economy by 6.65 percent and forced many major companies like Daewoo to close down. However, the volume of trade bounced back dramatically. Eventually on Nov. 24, according to the Ministry of Knowledge Economy, the export record showed that Korea exported US$260 billion worth of goods from January to September, reaching ninth place.
The global financial crisis significantly impacted export. According to the Ministry of Knowledge Economy, the export rate of the top 15 global export countries was reduced by 27.8% on average. However, Korea has weathered the impact relatively better than other competitors. Korea had a 20.9% decrease in the export rates while other countries like the UK recorded a 30.5% decrease, Canada 36.6%, and Russia 44.3%. Also, the trade surplus reached US$30.1 billion and ranked 5th in the world after China (US$136.3 billion), Germany (US$122.1 billion), Russia (US$76.7 billion) and the Netherlands (US$33.9 billion).
The 46th Trade Day in Korea was held not only for celebrating Korea becoming the world's top ten exporting country but also for promising more prosperity in the future. In 1964, the first industries such as agriculture were the main exported goods. But now semiconductors, ships, cars, and chemicals are the core export goods. The volume and quality of products has dramatically improved. The development in our trade system has been continuing. Trade contributes 65~75 percent of the country's economic development. This Trade Day reminded people of the importance of trade and commended their efforts to improve international competitiveness.
Experts expect the success of future trade of South Korea to be heavily related to the IT industry. The strength of IT businesses in Korea is not news. After the global economic crisis, while many foreign competitors are on the verge on bankruptcy, Korean companies with exclusive and innovative technologies have actually accelerated. A representative from the Ministry of Knowledge Economy said, "Liquid crystal devices like LCDs had over 17% increase in export until October, and semiconductors also showed growth since September."
The IT industry has rebounded quicker than other fields. Consumer demand has sprung back along with rise in unit price. 1G D-ram price has increased 129.8 percent from US$1.14 to US$2.62 through November. 16G products also showed an increase in price from US$1.92 to US$5.09. 32-inch TFT LCD price also increased over 100 percent, US$204, in November. The strong results by IT industry have mainly contributed to the big trade surplus this year. Based on the competitive advantage to other countries, Korea will likely keep exceeding in selling IT products. Also, it is essential that the government support other industries, such as ship construction, cars, and other fledgling industries, to possibly replace the IT industry in the future..
The Korean government will support the country's future role in global trades. The government will provide insurance and guarantees worth 200 trillion won to businesses in an effort to boost exports. Also, the government is aware of the possible decline in exports due to gains made by the nation's currency and soaring oil prices. To cushion the possible setback, the Knowledge Economy Ministry will set aside an additional 100 billion won in budget for the export insurance fund and will increase insurance and guarantees for exporters by 30 trillion won to 200 trillion won. The ministry ensures the success of exports in the future and plans for nurturing export-boosting engines of the future.
The 46th Trade Day opened with celebrations of the successful year. However, at the same time, it was a day of promise for the future. It is crucial that leaders be ready for the future of South Korea's trade. They not only have to keep supporting already prospering industries like the IT industry, but also need to develop infant industries that will replace the IT industry in the future. The past shows the inevitability of change of exporting goods with time. The history reveals that the success today is a product of accumulative efforts and passions from the past. Despite the current global financial crisis, this Trade Day promised longevity. For further success in the future, a sound interaction between the government and companies will be crucial.
